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    Detailed analysis of the costs of quality: Lager Corp

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    Lager Corp. produces and supplies automotive manufactures with the mechanisms used to adjust the positions of front seating units. Several competitors have recently entered the market, and management is concerned that the quality of the company's current products may be surpassed by the quality of the new competitors' products. The controller was asked to conduct an analysis of the efforts in January to improve product quality. His analysis generated the following costs of quality:

    Training of employees $22,400
    Customer services 13,600
    Reinspection of rework 28,000
    Quality audits 31,300
    Design review 27,500
    Warranty claims 67,100
    Sample testing of materials 27,400
    Returned goods 98,700
    Preventative maintenances 26,500
    Quality engineering 18,700
    Setup for testing new products 42,100
    Scrap and rework 76,500
    Losses caused by vendor scrap 65,800
    Product simulation 28,400

    1. Prepare a detailed analysis of the costs of quality
    2. Comment on the company's current efforts to improve product quality.

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    Solution Summary

    Your tutorial includes a potential quality report, a few insights about the report and a suggestion.